The ability to change the beneficiary is a major benefit. In my case it would have side-stepped many many avoidable problems and in some cases less than optimally employed funds. The trust problem lies with trusting the individual who retains that ability to honor intent. No one plans for a child with major mental health or substance abuse issues, so having flexibility to respond is not usually foreseen, but can be a major help.DIFAR31 wrote: ↑Wed Feb 19, 2020 12:00 pmPerhaps, but a least with a custodial/UTMA 529 account, the custodian will not be allowed to change the beneficiary. Trust but verify.
In our case, the 529's I created for my 3 sons in the end were all used for education purposes. The son who was not able to leverage those funds, can and has been supported in different ways. The money that was in a UTMA was completely different, when he turned 21, he would have been able to buy enough heroin to kill himself 100 times. He knew about the money because he worked jobs and filed taxes and the income from the UTMA accounts were reported on his tax return. Unless you do illegal things, it is not possible to hide this from a reasonably attentive person. So my father-in-law and I had the unenviable problem of legal spending this money on the child on a tight time frame (less than 2 years). We ended up spending the money on things that were far from optimal, but totally legal.
A UTMA 529 account suffers from the same disadvantage as a brokerage UTMA since the money can be withdrawn by beneficiary at age of majority and used for whatever intent with only potential tax consequences.
If the donor is desires unequivocally that the child/beneficiary receive that money and is willing to give full control at a relatively young age, then the UTMA optimizes that desire.
This exchange has gone too long and way past the OP's questions. I will just say that the decisions are not so cut and dried, trust and agency issues exist all over the place in these situations. One should go in with realistic understanding of trade-offs. There is no one best solution.
BTW, in a larger context, Jeffrey Condon's book, "Beyond the Grave" is very good book to read as he give a series of real-world samples of the desires of individuals and how those desires worked out in the real world.